Roopsha Dasguupta  

This is the Daily Edit from the economic times. It's August 26. And we put the focus on better insolvency and Bankruptcy Code grooming to fix bad haircuts banks are reportedly continuing to take steep haircuts in the resolution of bad loans. This is disconcerting latest data by the insolvency and bankruptcy Board of India IB BI for the end of June 30 showed that of the total claims of rupees 7.67 lakh crore in about 517 cases creditors have realized around rupees 2.35 lakh crore through resolution plans, the haircuts that banks have to take relative to the admitted claims is 69% this implies an average of rupees 69 going towards losses of every rupees 100 of their claims admitted for resolution under the bankruptcy code. This should improve as the public policy goal of the insolvency resolution is to maximize the value of the asset being resolved, minimize the haircuts that banks have to take and reduce the burden on taxpayers. A key reason for recoveries plummeting is the delay in the process of insolvency that must change the legal infrastructure should be more robust to prevent any attempts to block insolvency resolution through stays. There should be no delay either in setting up multiple benches for the aggregating authority banks must report as soon as they happen and the National Company Law tribunal NCLT must admit the petitions swiftly the resolution must be time bound. delays could dissuade prospective resolution applicants and also lenders from taking the insolvency and Bankruptcy Code IBC route easing regulation to allow asset reconstruction companies aarC to participate as resolution applicants makes sense the national asset reconstruction Company Limited any RCL to acquire bad loans from banks and the India debt resolution Company Limited ID RCL. To manage and dispose of the assets are in place, there are 28 Other AR C's to competition among AR c's will also help businesses revive and protect protective assets of the economy. Any course corrections if required in the law to ensure faster progress in resolving the bad loan problem are in order. You have been listening to Roopsha Dasguupta, tune into et play Economic Times latest platform for all audio content.